Congressional appropriators are backing the Pentagon’s push to speed up weapons buying, but warn that speed “must be factored alongside cost, performance, lethality and scalability.”
The House released the final 2026 minibus funding package early Tuesday, which includes money for the Departments of Defense, Homeland Security, Labor, Education, Housing and Urban Development, Transportation and Health and Human Services. If passed, the bill would increase defense spending to more than $839 billion — roughly $8.4 billion above the White House’s fiscal 2026 request. House leaders plan to vote on the package later this week.
Congressional negotiators said they “strongly support” the Defense Department’s acquisition reforms, but pushed back on the Pentagon’s efforts to seek additional authorities or changes to its budget and appropriations framework until it fixes its internal processes.
“Rapid delivery of ineffective weapon systems at exorbitant cost will not serve the warfighter well,” the appropriators wrote.
Lawmakers also raised concerns about joint requirements process reform and deep cuts to the department’s acquisition workforce that could jeopardize its ability to carry out Defense Secretary Pete Hegseth’s acquisition reform agenda.
At the very end of the document, Hegseth instructed the department to “improve budget flexibility.”
“Where additional authorities are required, the [undersecretary of defense for acquisition and sustainment], in coordination with the military departments, shall develop a legislative engagement plan to ensure Congress is informed of and aligned with proposed reforms requiring any statutory change,” Hegseth wrote. “All actions will comply with applicable statutes, appropriations law, and procurement integrity requirements.”
That language was likely to become a friction point with Congressional leaders, and now appropriators are saying that reforms laid out in Hegseth’s memo are “internal in nature,” and that the Defense Department needs to “demonstrate progress on these internal procedures and administrative measures” before pursuing additional budget flexibility.
For instance, lawmakers said above-threshold transfer and reprogramming requests are often slowed because “a significant amount of the subcommittees’ time is consumed by waiting for the department to provide requested additional details and justification for these requests.”
“Providing this information alongside the submission of the request would accelerate consideration and create a nimbler process without altering existing authority or reprogramming thresholds,” the appropriators said.
Congressional leaders urged the department’s comptroller and the services’ assistant secretaries to work with the House and Senate Defense Appropriations Subcommittees to improve the amount of detail and justification provided in reprogramming submissions.
Congress gave the department some budget flexibility in 2024 but stopped short of granting broader authorities the department and reform advocates have been seeking that would allow DoD to move money more freely within its accounts without explicit congressional approval.
The Defense Department has also been pushing to change the hardware-centric budgeting model Congress uses to plan and execute the Pentagon’s spending by moving away from the traditional “colors of money” tied to different phases of weapons development. And while DoD has run several pilot projects to test the idea, lawmakers have been hesitant to authorize broader adoption of the approach due to the department’s inability to provide Congress with sufficient data showing the new approach would be more effective than traditional appropriation practices.
“To date, the agreement observes no new or compelling justification or quantitative analysis to support proposals that would alter the current appropriations framework, including with respect to reprogramming thresholds, notification requirements, new start guidelines, or consolidation into a single color of money,” the appropriators said.
“Consideration of legislative changes to the appropriations structure is premature until the Department has demonstrated full and effective use of its existing flexibilities and addressed persistent internal delays,” they added.
Army’s agile funding request rejected
While appropriators approved all 13 budget line-item consolidations requested by the Army in its fiscal 2026 budget, they flatly rejected the Army’s “agile funding” request to raise notification threshold for reprogramming or transfers from $15 million to $50 million for procurement programs and to $25 million for research and development efforts.
“The Department already has sufficient authorities to restructure its internal programming and budgeting processes, and many current challenges with execution can be solved by actions within the Department and do not require statutory change or congressional intervention … Increasing reprogramming thresholds alone is unlikely to improve program execution. Decisions to unilaterally move funding in the year of execution without sufficient oversight introduce uncertainty to both the programs impacted and the industrial base, increasing the risk of development and procurement delays,” the appropriators said.
“The House and Senate Defense Appropriations Subcommittees discourage the secretary of defense and the service secretaries from submitting future requests of this nature,” they added.
Joint requirements reform risks
The Defense Department kicked off the process of dismantling its decades-old Joint Capabilities Integration and Development System (JCIDS) process last year — and Hegseth ordered the Joint Requirements Oversight Council (JROC), which oversees the process, to stop validating service-level requirements to the “maximum extent permitted by law.”
House and Senate appropriators said they support the reform but want more detail on how defense officials plan to mitigate potential risks, such as the military services potentially prioritizing service-specific solutions over joint ones or top-down decision-making stifling bottom-up innovation.
The deputy secretary of defense, vice chairman of the Joint Chiefs of Staff and service secretaries have 60 days to brief appropriators on how they plan to address those risks.
Workforce is the linchpin of acquisition reform
DoD leaders have long warned that the depth of this administration’s workforce cuts could cripple the department’s ability to execute Hegseth’s acquisition reforms.
Appropriators echoed those concerns, saying they are “concerned that recent reductions to the acquisition workforce, the effects of which have yet to be realized, will negatively affect the Department of Defense’s ability to achieve the initial speed and agility sought by this reform effort.”
Lawmakers directed the defense secretary along with service secretaries to submit an acquisition workforce strategy, including a comprehensive assessment of the personnel needed to execute Hegseth’s and Congress’ proposed acquisition reforms.
If you would like to contact this reporter about recent changes in the federal government, please email anastasia.obis@federalnewsnetwork.com or reach out on Signal at (301) 830-2747.
OPINION — The Pentagon’s push to overhaul its slow, specification-driven procurement system is an overdue acknowledgment that our defense industrial base has become too narrow, too fragile, and too dependent on foreign supply chains. America’s defense establishment is finally waking up to a critical weakness that has metastasized in recent decades: we have drifted away from the industrial might that once formed the bedrock of our economy and allowed us to out-produce any adversary in the world.
While there are many warning signs, one symptom of the problem is unmistakably clear: the United States is not producing what it needs at the speed and scale modern conflict demands. Recent reporting shows the U.S. Army is still struggling to meet its 155mm artillery-shell production goals after years of effort. Across the spectrum—from advanced missile interceptors to something as basic as black powder—we are falling dangerously behind in both production capacity and supply-chain resilience. For now, these shortfalls are appearing in conflicts that don’t directly involve American troops, but the truth is that a major war will see the United States forced to ration materials and munitions, deploying untested prototypes on the battlefield while the defense industrial base races to catch up. We must act now to prevent this from happening.
If we are serious about winning the next war—or better yet, deter it—we must rethink both how we buy military equipment and weapons, and how fast we can make them. We don’t need another half measure or a fully government solution. Instead, the government should leverage the private sector to build a nationwide network of multifaceted, resilient manufacturing nodes that can surge production of everything from drones, vehicles, and body armor to medicine, munitions, and microelectronics in times of crisis, while sustaining production lines for commercial products in peacetime. The power of the U.S. economy can, and should, be leveraged to solve this problem.
This network of production centers, or campuses, would bring together startups and established manufacturers in the same ecosystem, enabling the kind of rapid prototyping, pilot production, and full-rate manufacturing the Pentagon is urgently seeking. Each of these campuses would be designed for flexibility, with modular production capabilities that can be rapidly upgraded, and shared heavy infrastructure such as test beds, utilities, and analytical systems. Furthermore, these facilities would be part of a connected national network, leveraging the regional strengths of each part of the country while avoiding the single points of failure commonly found in today’s highly concentrated manufacturing hubs.
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Today, the gap between a successful prototype and real-world production is often a chasm in the defense industrial base. Major firms are often tied up maintaining legacy systems while cash-strapped startups cannot afford to build compliant, capital-intensive factories without production contracts. These startups are often told that contracts won’t come until they prove they can manufacture at scale. So promising technologies stall in a chicken-or-egg limbo while delays snowball. The Pentagon’s renewed embrace of OTAs helps, but money alone won’t fix a physical bottleneck. We need places where cutting-edge firms can scale quickly, and affordably.
A national network of industrial campuses is designed to fill this gap. Under this model, companies wouldn’t pay construction costs up front; lease payments would begin only after they move in and start generating revenue. Layering into the model a certain number of shared facilities—initially funded by the Pentagon—would reduce risk, accelerate development, and dramatically shorten production timelines. Young companies gain room to grow. Established firms gain access to fresh innovation - and taxpayer dollars go further.
This is not a radical idea. It is an evolution of the model that once made America unstoppable. In World War II, factories across the economy—automotive, textile, consumer goods, and more—transformed to support the war effort. That surge capacity happened because the United States had an existing industrial ecosystem ready to mobilize. Today, we no longer have one.
Decades of offshoring, consolidation, and a fixation on short-term efficiency have left our industrial base brittle and full of holes. COVID-19 made that painfully clear when the world’s largest economy found itself dependent on foreign suppliers for PPE and basic supplies. Semiconductor shortages still slow defense and automotive lines. Meanwhile, our adversaries are turning basic industries into warfighting assets. Russian bakeries are producing drones and China is treating its manufacturing capabilities as a strategic weapon while in America, we’ve been treating our manufacturing base like an accounting exercise.
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The government must shift course. Manufacturing is a strategic asset—every bit as important as ships, planes, satellites, or submarines. Washington should fund shared industrial infrastructure, de-risk private investment, and let market forces drive efficiency.
The math is simple. In some cases, companies piloting these programs have delivered 4:1 to 25:1 returns on tax dollars, generating major gains for minimal government investments. With a defense budget exceeding $800 billion, the Pentagon can easily afford to invest a sliver of that—well under one percent—to send a clear, unambiguous demand signal to the private sector that America is rebuilding its industrial backbone, and doing it now.
History shows what happens when we do. Modest seed capital during World War II and the Apollo program unlocked massive private investment and generated hundreds of innovations that have come to define the modern age. These campuses would be more than factories—they would be hubs where manufacturers, universities, investors, and federal partners build self-sustaining ecosystems capable of accelerating innovation, fostering talent, and producing critical goods at scale. They would restore American industrial depth, innovation, and flexibility—our most reliable, most underestimated tools of deterrence.
America is racing into the next complex era of great-power competition with a defense industrial base limping along from the last era; one that is simply too small, too fragile, and too slow. We can invent extraordinary technologies, but what use are they sitting in a lab if we can’t produce them at scale? If that doesn’t change, the United States risks discovering—too late—that innovation without industrial power is a hollow advantage.
Rebuilding American manufacturing will be difficult. But the cost of inaction is far higher. A nation with a deep, flexible industrial base can surge production, absorb economic shocks, and outlast any adversary, on the battlefield and the home front. A nation without one is forced to ration weapons, delay deployments, and scramble to keep its supply chains functioning.
We can build this network now or we can wait for a crisis to expose, once again, how fragile our industrial base has become. In the next conflict, the world’s strongest military must be able to depend on its factories to keep up.
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FEATURED INTERVIEW — As the Pentagon undertakes its most ambitious overhaul yet of how it acquires new warfighting capabilities, Silicon Valley entrepreneurs are weighing in on whether the modernization effort can happen quickly enough to bring the U.S. up to speed with China in a time of rapid technological development.
When the overhaul was announced earlier this month, Secretary of War Pete Hegseth said the reforms aims to dramatically accelerate how the Department buys and fields new capabilities and that the changes are specifically aimed at cutting bureaucracy, rewarding rapid development, and pushing defense primes to invest more of their capital in new capabilities.
In the weeks since the announcement, the U.S. Army has shared details on how it will reform its service-level acquisition process. Part of the change involves consolidating the service’s program executive offices (PEOs), which are responsible for buying new weapons, into six new offices called “portfolio acquisition executives” (PAEs). Plans also include the creation of a new office to rapidly field and scale emerging technologies. Similar initiatives are in the works at the other services.
Measures like these have been championed by the private sector, which has traditionally on the cutting edge of innovative capabilities for decades. Cipher Brief COO & Executive Editor Brad Christian caught up with Entrepreneur and Stanford Professor Steve Blank, who recently published a Department of War Program Executive Office directory to help entrepreneurs better navigate the current complicated system for selling to government. Their conversation has been lightly edited for length and clarity.
Steve Blank is an adjunct professor at Stanford and co-founder of the Gordian Knot Center for National Security Innovation. His book, The Four Steps to the Epiphany is credited with launching the Lean Startup movement. He created the curriculum for the National Science Foundation Innovation Corps. At Stanford, he co-created the Department of Defense Hacking for Defense and Department of State Hacking for Diplomacy curriculums. He is co-author of The Startup Owner's Manual.
THE INTERVIEW
Christian: Describe your initial reaction to the Pentagon's somewhat surprise announcement that it was overhauling its acquisition process.
Blank: It was mind blowing. It was mind blowing not because anything the Secretary said was new; these are things that people who are interested in acquisition reform have been asking for the last 10 years. But it was put in a single package and was clearly done by the infusion of people who have actually run large businesses and were used to all the language of organizations that already know how to deliver with speed and urgency.
The part that didn't get said, is essentially that the Department of War wants to adopt startup innovation techniques of lean iteration, pivots, incremental releases, good enough delivery, and that gets you what the Secretary asked for, which was speed of delivery. But all those are things that we've lived with in Silicon Valley for the last 50 years. And it wasn't until we had people who worked outside of buildings with no windows inside the Pentagon to understand that those techniques could actually be applied. And it required blowing up the existing system. And they did that spectacularly well. There are very few holes in these proposals.
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Christian: Obviously the Pentagon procurement system is a product of decades of bureaucracy and rules. Are you hopeful that you're going to be able to see the kind of change in the rapid timeline that they've laid forth here?
Blank: Number one, this is a pretty extensive reorganization. Right now, the Department of War is siloed between requirements and system centers for testing and prototyping and acquisition, which was the acquisition with a small A with the PEOs and program managers, and then it went to contracts and then it went to sustainment, et cetera.
Those were silos. Now we're putting it all underneath a single portfolio acquisition executive. So, instead of making their offices 10,000 people, it's actually a matrix organization, much like a combatant command is. Most of those people will stay in their existing organizations but now be tasked to work on specific portfolios. And the portfolios will no longer be arranged by weapons system. They're going to be arranged, for example, by war fighting concepts or technology concepts, et cetera.
That said, boy are they trying moving an elephant and make it dance. And at the same time, they recognized - this was one of the genius parts - that people won't just get a memo and know what to do. Historically, they've depended on the Defense Acquisition University, which taught contracting officers and the rest, how to work with the 5,000 pages of the DFAR and FAR, Federal Acquisition, Defense Acquisition Regulations. One of the unnoticed things was that they basically told the Defense Acquisition University, to stop teaching what they're teaching today, recognizing that they need to teach people this new methodology. That's not going to happen by telepathy.
First of all, we need to train the trainers, then we need to train all the people who've grown up in their career following the paperwork. I predict six months or a year of chaos and confusion. And there are always saboteurs in a large-scale reorganization who are angry that their cheese has been moved or worse, their authority has been diminished or their head count went somewhere else. This is going to be no different except maybe at a bigger scale.
In the end, if we pull this off (and I'll explain the only possible reason not to do this) the country will be much better for it.
The other obstacle will be if you're on the board of directors and the executive staff of a prime, you're going to go through the 12 stages of denial and grief and whatever because I don't know how many times both Deputy Secretary of Defense Steve Feinberg and Secretary Hegseth made it clear that the primes weren't delivering and they weren't investing in the things the country needed and they got used to the system and we were kind of mutually dependent on a broken system - and that's over. Well, you're not going to let your stockholders say you just went home and packed up. Obviously, it's pretty clear that appealing to the Pentagon isn't going to work, but Congress is “coin operated”. This is now going to be a race of lobbying cash from the primes versus lobbying cash for the first time from private equity and venture capital. So it's going to be, who has the biggest pile of cash to influence Congress and the executive branch to keep these rules in place or modify them?
Remember what a disaster this is if you're an existing large company selling to the DoD. It says number one, we're going to buy commercial off the shelf. Number two, we're going to buy commercial off the shelf and then modify it. If and only if either one and two work, we will do some bespoke contracting with the existing organization. It's never happened before. Pretty clear, pretty direct. So, the easy thing would be for primes to change their business model. But my prediction is they're going to double and triple down on the amount of lobbying and dollars spent.
Christian:In addition to the lobbying are we going to see consolidation? A major prime, like you said, isn't going to just pack up their bags and go home. Are they just going to start scooping up all of the small commercial providers?
Blank: In the space segment, they were already doing that. And in fact, were told to kind of stand down and that these things needed to flourish. You have to remember that primes and corporations are companies. Their number one priority, at least in their heads, is no longer national interests, it's the shareholders and returns and revenues and profits. That's the nature of capitalism. The problem here is that the Department of War said, 'Well, that's nice, but we're not getting what we need out of that. Send a note to your shareholders that life's about to change'. That's going to create a lot of conflict - with a lot of money involved - in trying to bend the rules back.
And just as an aside, the primes aren't useless. You don't want them to go out of business. No startup is building an aircraft carrier or a joint strike fighter. We can make the argument of whether we should anymore, but that's secondary. That level of complexity and skill set is just not built yet. Maybe the Andurils and others will get there in another five years, but they're not there yet. And so, waving a wand and making the primes go away completely is equally inane as saying we could depend on startups for everything that the Department of War needs.
But the balance of power, at least as the secretary and deputy believe, is that we need to be building things faster and delivering them faster and on time. And we're going to look for alternate sources. That's just a mind blower. So, as I said, I see six months to a year of confusion as this reorganization happens and people come and go as they establish who's in charge, what the rules are, et cetera.
The only good thing about making this happen is in a normal administration, the administration would wait for Congress's approval. I've not seen that happen in many of these cases with this administration. And in this case, it might actually be good for the country. Time will tell.
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Christian: You referenced decades of Silicon Valley's experience with iterating and moving quickly. One of the threats and one of the actual challenges that a country like China poses to America is they have a top-down autocratic government that doesn't change every four years. That presents a unique challenge to the Pentagon that Silicon Valley doesn't know, or the private sector doesn't necessarily have. How much of a risk is there for the next administration to come in and potentially change everything? And then, if you're one of those big primes, are you baking that into your long-term planning that this might shift in a measurable way in the future? Or do you think these changes are going to be something that is so overwhelmingly positive that future administrations have to stick with it?
Blank: Well, if you were asking me this three years ago, I would have said you should get all this done now because it's going to be flipped back in three years. What's different now though, is the amount of capital available for startups, scale-ups, and private equity firms that can match or overpower the lobbying efforts of the primes. So as I said, both the executive branch and Congress are coin operated, even more so now than ever. And for the first time ever, the insurgents have as much or more coin than the incumbents. That's what's going to change this game.
So yes, a Democratic administration or another Republican one might have a different opinion. But in this case, we're talking about piles of money flooding the streets of Washington D.C. to try to change the game. Think about who is now sitting in the cabinet and in other places where we're seeing people with commercial experience for the first time ever at scale, inside the executive branch for sure and inside the Department of War which changes the nature of the conversation and as we're seeing - the types of things they're recommending. It wasn't that people didn't recognize this before. It was kind of hard to explain this to people who had never run a business or who have been career successful. I've said for years, we had world class organizations, world class people for a world that no longer existed.
Finally, we have people who understand what that world should be like because they've been operating in it. Secretary Feinberg has been writing checks for tens of billions of dollars- buying aircraft carriers, okay, he’s written those kinds of checks before. Tell me who else has ever been in that position.
Again, it's not that the DOW should run like a corporation or a startup, but having that experience sets a bar for what you know is possible for doing extraordinary things. It's what this country knew how to do in World War II and during the Cold War, and we just kind of lost it when Robert McNamara, ex-chief financial officer of Ford, put in the first version of the Planning, Programming, Budgeting and Execution System (PPBE) in 1962. We've been operating on that system for 63 years, or some variance of it.
Basically, he imposed a chief financial officer's strategy on budgeting and planning, which made sense at the time. It stopped making sense about 15 years ago, but no one inside the building knew what to do differently. That's changed.
There was also one set of announcements that kind of flew under the radar, and that was that the policy organization in the DOW lost three organizations to acquisition and sustainment (A&S). I think Elbridge Colby runs that group and it went to A&S. So all the foreign military sales and all the policy stuff kind of disappeared overnight. I don't know what the talking points will be, but the optics aren't great for policy. That's number one.
The second thing that got buried in the memo and I'm not sure it was in the speech, but this new Economic Defense Unit (EDU) I think has taken over the office of strategic capital. And I think that's good given what the agenda is, which is that we're essentially using the whole of nation approach to decouple from China and not only invest in critical minerals but in the other parts of the ecosystem that we need as well, everything from batteries to drone motors to whatever. So we can operate independently. Scaling that unit up was strategically as important.
This was an acquisition announcement, but watching all these other moves are really smart chess pieces at scale, not just nibbling around the edges, but at scale. And I think paying attention to the other moves that are being made inside the DOW, you'll at least understand the master chess game that they're at least trying to implement. It's pretty smart.
Christian: You've done incredible work recently with helping people understand and navigate his environment in ways that perhaps were difficult for people to understand before. What are you going to be looking for next and what are you potentially going to be working on as a result of these changes?
Blank: I think you're referring to the PEO directory that I wrote, which is about 300 pages long. It’s the first phone book for the Department of War with a 30 page preamble of go-to-market strategies. I literally have started rewriting it and it's now going to be called the Portfolio Acquisition Executive Handbook and now it's going to explain how PAEs work and what the silos looked like before and how each service is reorganizing.
For example, the Army likely will condense 12 PEOs into six portfolios and make major shifts, this month or certainly by the end of the year. And the other services will follow. I think the Army is a little ahead of everybody else. But having a phone book to actually explain who's who and what they're supposed to be doing.
As I said, it will be six months to a year of chaos and I think having some kind of handbook that at least shows you where things are heading and who are the new people to call on would be helpful. So that's what the Stanford Gordian Knot Center for National Security Innovation is doing.
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